Monday’s session saw little change in the Pound Sterling to Euro (GBP/EUR) exchange rate, as the Eurozone’s data was too mixed to influence Euro (EUR) strength but the Pound (GBP) failed to recover any further from its worst levels.

GBP/EUR is still trending near its worst levels in months following last week’s plunge from 1.1324 to 1.1197, but it began to edge higher again in reaction to some mixed Eurozone PMI data on Tuesday.

While GBP/EUR has been buoyed to above the key level of 1.12, this has been the longest the pair has trended this low since the beginning of 2018.

Sterling still has little in the way of domestic support, amid a lack of fresh supportive data and market reaction to Monday’s speech from Bank of England (BoE) Deputy Governor Ben Broadbent.

Broadbent took a cautious tone regarding monetary policy and noted that the bank’s move away from quantitative easing (QE) should not be taken as a hawkish signal by markets.

Some investors have opted to buy the weakened Pound (GBP) back from its cheapest levels since last Friday, but that movement has been too limited to support a particularly strong recovery.

With UK Parliament breaking for its summer recess this week, investors expect Brexit jitters to cool and focus is expected to turn towards the Bank of England’s (BoE) upcoming August policy decision.

Economists have a mixed view on what the bank is expected to do in its meeting, too. While there is a small majority expectation that the bank will hike UK interest rates in its decision next week, recent data and vague comments from BoE officials have weighed.

There are now more investors and analysts speculating that the bank would be within reason to leave monetary policy frozen until 2019.

As well as indicating that the bank’s move away from quantitative easing (QE) was not a hawkish signal, Broadbent also stated he was still undecided on whether or not to vote for a UK interest rate hike during next week’s meeting.

Euro (EUR) Exchange Rates Slip as Eurozone PMI Projections Fall Short

Much of the Euro’s strength against the Pound in recent sessions has been due to weakness in the US Dollar (USD). As the Euro and US Dollar have a negative correlation, this helped the Euro strengthen and keep pressure on GBP/EUR.

However, the Euro lacked in domestic support and the latest Eurozone data didn’t give investors much reason to buy the currency either. Markit published its July PMI projections for various Eurozone nations and the bloc as a whole.

While German PMIs actually beat forecasts in every print, other Eurozone nations including France held back the strength of the results and caused the PMI to fall short of expectations in services and composite prints.

The Eurozone’s manufacturing PMI unexpectedly rose from 54.9 to 55.1, but the services PMI unexpectedly slumped to 54.4 despite being expected to only slip from 55.2 to 55. The overall composite print weakened to a disappointing 54.3.

Despite this though, the Pound to Euro exchange rate’s gains were modest on Tuesday.

Pound to Euro (GBP/EUR) Forecast: German Confidence and European Central Bank Decision Ahead

While Tuesday’s Eurozone data was mixed, Eurozone data and news is likely to continue to be the primary driver of Pound to Euro (GBP/EUR) exchange rate movement in the coming days.

Wednesday will see the publication of Germany’s July business confidence report from Ifo, which are likely to be the day’s most influential figures.

UK distributive trades data from the Confederation of British Industry (CBI) will be published too.

However, it’s possible that even if Ifo’s German business data surprises investors the Euro’s movement will remain modest as investors highly anticipate Thursday’s session.

The European Central Bank (ECB) will hold its July monetary policy decision on Thursday.

The bank is not expected to make any changes to policy, but its tone regarding issues like the Eurozone economy and the US-China trade war could prove particularly influential to the Pound to Euro (GBP/EUR) exchange rate.